Buyer Tips

Finding the right house

ALL REAL ESTATE IS GOOD TO BUY NOW!
(Residential, Multi-units, Commercial and Industrial)

With lending regulations changing all the time it’s important to work with a knowledgeable mortgage professional.
The first that we need to do is get you qualified, we can help you with this process.
We work with lending institutions that have been in business for years, plus have a well respected name in the industry. There are over a dozen of programs out there to meet your needs.
We will coordinate with your mortgage representative to make sure it’s a smooth transaction all the way to closing. We will go over Adjustable Rate Mortgages (ARM’s), 15 year verses a 30 year mortgage, interest only mortgage, what is a balloon payment, conforming verses a non-conforming mortgage, conventional verses insured conventional mortgage, how to buy down your interest rate and the advantages and disadvantages of putting more or less down on a property. Dave Kuno has used several programs personally so he can give you a solid foundation to go from. Then we will have the mortgage representative fine tune the process and explain your options in more detail. Contact us to get started.

Interest rates are historically great, plenty of inventory to choose from including more foreclosures. Sellers are willing to do what ever it takes to sell including help pay for buyers closing costs. The media has everyone freaked out. There is plenty of money to lend. If you have good credit and good debt to income ratio's (36%-Conventional to 41%-FHA) you can still get a mortgage with the best interest rates and terms available. Lenders are using the same qualifying guidelines they did 20 years ago. There is money to lend!

Interest rates will rise at some point during the economic recovery, the key is when?
Please keep inflation in mind. The key is how much and for how long!
That is why if you plan on doing anything do it while interest rates are low. When the FED (Federal Reserve) starts to raise rates then you will see interest rates rise.
We believe the FED will not raise rates for a while because of the slow economic growth (Middle Class) due to Globalization, out sourcing of jobs.

When do I buy?

If you are waiting for rates to drop further you are losing money. It does sound strange, how am I losing money? What we mean is losing equity. Homes have come down 8% to 25% depending on location. 
Every market is different, this is where Dave's number crunching and research experience will help you. "Equity Out Weights Monthly Savings".

When buying real estate the first thing we need to know is "what do you plan on doing with it" and "how long you plan on holding on to it". Once we have this information we can evaluate your purchase like no other brokerage company. Remember Dave has “been there done that” for himself many times over as a Realtor, Investor, Construction & Property Management Company Owner.

As a buyer, these are the questions you have to ask yourself:

  1. Should I wait to see how low interest rates go?
  2. Should I wait to see how far home prices fall?

Below are examples ONLY, interest rates change daily. The market will have to get vacant inventory levels down to normal for the market to stabilize completely. Some markets have already bottomed while others are still deflating.
We just want to give you a foundation to start from and to get you thinking!

As far as interest rates:

If rates averaged 5.75% and home prices went up was is it worth it? No not for $128.58 a month savings. $2462.87 (6.25% if this is the current rate) minus $2334.29 (5.75%) = $128.58 Why you ask? Because if home prices rise 6% to 10% because homes are selling, you lose all that equity. $128.58 a month for 7 years is $10,800.72 The reason I use 7 years this is how long the average family lives in a home before they sell to purchase another one. If you do not buy you may lose $20,000 to $50,000 or more in equity depending on the market the home is located. Just substitute the numbers below with your figures at the bottom of this page (loan calculator). Equity out weights monthly savings in this market we are in right now. You can always re-finance but you can not change the market (equity)!

Examples:

$400,000 loan at 6.25% for 30 years is $2462.87 a month*
$400,000 loan at 6.00% for 30 years is $2398.20 a month*
$400,000 loan at 5.75% for 30 years is $2334.29 a month*
$400,000 loan at 5.50% for 30 years is $2271.16 a month*
$400,000 loan at 5.25% for 30 years is $2208.81 a month*
$400,000 loan at 5.00% for 30 years is $2147.29 a month*


*principal & interest only

FORECLOSURES

We are HUD Registerd Agents (Housing and Urban Development) to help Buyers! There also is FHA 203K Mortgage Programs for Repairs and Up-dates.
Contact Us Today!

This is a fast and growing market for buyers with great opportunities if done right. Traditional owner-occupied homes have dropped in price from 8% to 25% depending on where the property is located. That's still a good market to buy in but what would happen if you made 25% or more in instant equity purchasing a foreclosure! Yes, WOW! There are homes in everyone’s price range with a wide range of inventory to choose from; new construction, newer and older homes. Some just need a fresh coat of paint and cleaning. The key to purchasing one of these homes is knowing how and what to look for.
This is why you need KUNO Real Estate. Dave Kuno purchased dozens of these homes and completely renovated them to new to sell.
We know this market like no other real estate company, period!

Loan Calculator
Amount of Loan:
Annual Interest Rate (%):
Term of Loan:
Monthly Loan Payment:

Property Price Calculator
Monthly payment you can afford:
Cash available for down payment and closing costs:
Annual mortgage interest rate (%):
Term of mortgage loan:
Closing costs (as % of home purchase price):
Estimated annual homeowner's & mortgage insurance & property taxes (as annual % of home sales price):
Approximate price of house:

If you need to sell your home to purchase another it can be a challenge but not impossible. Please do not listen to what you hear, every market is different. Dave has 16 years of market research experience. He will take the time to go over all your options in your market and the market you want to be in. This is what sets KUNO Real Estate apart from the rest, Market Research and presenting it to you were it makes sense. Keep in mind when it was a "sellers market" the seller received top dollar. When the seller purchased another home the seller paid top dollar. Now that it's a “buyers market” it's the opposite. When you sell you may break even or lose money but you make up for it when you buy, its all relative!
If you were to sell and not purchase anything then you will lose money (equity).

For example; We helped our client purchase a home 4 years ago for $350,000 at the time the market was peaking out. Now our client is married with a growing family and in need for a larger home. We sold their home for $310,000, a $40,000 loss.
As soon as we gathered all the information we needed on what type of home they were looking for we started searching the Multiple Listing Service (MLS) and found 3 different subdivisions with the school system they wanted to be in. Each subdivision homes were selling differently than the other based on age, square feet, beds, baths and so on. We compared all options and told them this particular subdivision will give them more dollar value with the criteria they were looking for. We helped them purchase a home for $650,000 which sold for $825,000 four years ago. Now you can see the $40,000 loss on their home gave a total gain of $135,000 on their new one ($825,000 minus $650,000 = $175,000 minus the $40,000 loss = $135,000). It's researching different markets to get the best value for the dollar.
Another example; We sold our clients home for $425,000 that we had helped them purchase six years ago for $525,000. Our clients upgraded to a $700,000 home which 4 years ago sold for $850,000. Our clients lost $100,000 on their home they sold but they made $50,000 in equity on their new purchase. The key is when will prices bottom and which markets will bottom first!
This is why Dave Kuno will break down everything you need to know. He is the best when it comes to researching markets and working with numbers!

Contact Kuno Real Estate Today

Here in the Midwest we do not have huge market swings like they do in California, Arizona, Vegas and Florida. Please do not listen to the media.
Our area has about 4% to 6% average appreciation a year under normal market conditions which we have not had since the late 1990’s to 2001. Home values are based on economics but values were inflated due to above normal market activity that was created by non-traditional lending practices.
We are in a deflationary period due to Globalization and will continue to be for a while unless unemployment numbers start coming down fast & wages increasing not decreasing. Interest rates staying below 4% may help the market but it goes back to job growth with no wage deflation which keeps happening. I have been saying this since 2010. I don’t see a strong middle class until we stop importing. Without strong middle class home prices will fall or be stagnate.
Back in 2010 I also said that I would not see the FED raising rates either & that is still the FED’s position today.

Even if the Government helps create jobs we could still keep deflating. Why? Because what are these jobs going to pay? We need to create sustainable jobs were the average person is earning 50K to 100K, this will stabilize the market.
Incomes have to exceed the price for goods/services and inflation.
It will continue to be a buyers market until vacant inventory levels get back to normal.
Some areas have experienced an 8% to 15% decline and others 15% to 25% decline. The 15% to 25% declines are homes above $300,000 price range. Why? Because of sub-normal qualifying guidelines which fueled the new construction market in this price range, hence deflation. Existing homes were also affected above $300,000.
There was too much credit available.
The homes up to $130,000 are selling faster than the homes selling from $130,000 to $200,000. The homes above $200,000 are selling slower but once you get above $300,000 that market is the slowest.
Again we have to keep watching; investor confidence, commodities, interest rates, dollar, economic growth, GDP, employment numbers, wage numbers, inflation, deflation because of globalization and how it’s affecting our area. All this will dictate how many distressed properties that will become on the market (Short Sales & Foreclosures). The more homes that are for sale in a subdivision and no buyers, then that will lead to more deflation in home values. If one home in a subdivision is for sale we do not care what the market conditions are home values will be stable, Supply and Demand! There is always one family looking to live in that subdivision. It's when you have a lot of homes for sale in a subdivision that lead to falling prices because sellers keep lowering their price to sell. As a buyer even if prices come down another 3% to 5% you are still ahead of the game. Especially if you buy a foreclosure! You can not lose because of the equity you have made. But again it’s all about economics in an area!
Hopefully we gave you some points to think about please call us if you have any questions.
We are here to help you succeed. We have only scratched the surface on information.

Contact Kuno Real Estate Today


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